Your Queries (Loans): Top-up home loan has to be used for the property it is taken for

July 21, 2021 1:45 AM

The subsidy approval sometimes takes long and in case the subsidy has not yet come in, you will not be able to avail of the same from HDFC.

Part of the subsidy will have to be refunded, as this is a case of foreclosure. You will be eligible for lower interest rate only from 2018 till now.Part of the subsidy will have to be refunded, as this is a case of foreclosure. You will be eligible for lower interest rate only from 2018 till now.

Can I take a cheaper top-up loan rather than a personal loan?
—Kailesh Chaturvedi
I presume you are asking about a top-up loan on your home loan. Yes, the top-up loan is a cheaper loan than a personal loan. However, the end-use of the top-up loan is monitored by the bank and you have to use the money for repairs/ maintenance of the existing property.

I am planning to prepay a part of my home loan. Should I reduce the EMI amount or reduce the tenure?
—Anumedha
The decision to either reduce the EMI or to reduce the tenure will depend on your cash flows. If you are comfortable paying the existing EMI, then reducing the tenure is a better option as your net interest outgo will be significantly reduced. However, if your cash flows are stretched, then you should opt for reducing the EMI.

I took a loan from IndiaBulls in July 2018. I applied for foreclosure on June 16, 2021, and plan to transfer the loan to HDFC. I was told by IndiaBulls that I am eligible for the PMAY scheme as per the notification dated June 23, 2021. Will I get a proportionate subsidy for the interest already paid?
—Minakshi
The subsidy approval sometimes takes long and in case the subsidy has not yet come in, you will not be able to avail of the same from HDFC. Wait till the subsidy amount gets credited to your IndiaBulls account and only then transfer the loan. Part of the subsidy will have to be refunded, as this is a case of foreclosure. You will be eligible for lower interest rate only from 2018 till now.

I am taking a car loan of Rs 15 lakh and plan to pre-close a Rs 40 lakh home loan. I pay Rs 30,000 a month to my in-laws for the Rs 40 lakh they are giving to pay off the loan. What is the best split I can make?
—Jayanthi Murugan
A car loan is more expensive than a home loan. To keep your interest cost low, buy the car with full down payment. Pre-pay Rs 25 lakh of home loan. Ask your banker to reduce your EMI keeping the loan tenure same. This will bring down your home loan EMI and you will probably be able to manage your cash flows with the lower EMI and the Rs 30,000 repayment to your in-laws.

The writer is founder,
AZUKE Personal Finance Advisory (www.azukefinance.com). Send your queries to fepersonalfinance@expressindia.com

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